The hedge fund doing the silver buying has reply to Turd Fergusons metal report article you posted.

Regarding Turd's latest blog "WOW" (important) 16-Feb-11 07:25 pm

Turd Ferguson latest blog has our group buzzing but perhaps for all the wrong reasons. Thank you Turd for re-iterating what we have been trying to disseminate these last few weeks, but a small minority within our group is raising a note of caution. I would be remiss if I did not mention it here and ask all those with relevant thoughts and opinions to please chime in.

Some of us are questioning the INTEGRITY of the Comex data. Some of us are wondering whether or not Comex will deliberatly distort the March OI to obfuscate what is really going on. Initially, some of us openly questioned whether Comex would deliberately downplay the number of Mar OI as we approach March 1 in an attempt to hide the true nature of their problem. Now these same people are wondering if Comex is deliberately overstating the number of Mar OI standing for delivery with the intention of deliberately underreporting the number of contracts standing for delivery after the March 1 deadline.

Does everyone understand what I am saying? The Comex is playing rope a dope right now over-inflating the number of Mar OI (currently) and after the deadline Comex will under-report the actual number of contracts standing for delivery. This way Comex can hide the depth of its delivery problem. A poster says that Comex would bust if 8,535 contracts stood for delivery. I would arugue that closer to 6,700 contracts need to stand for delivery to bust Comex since there will be close to 9 million ounces from the Jan and Feb options that will also be standing for delivery.

What if Comex only reports say 4,000 contracts are standing for delivery come March 1 when the reality is something far higher? By doing this, Comex can fool the public into thinking that it does not have a delivery problem in March and use the month of March in order to extract physical silver to make its delivery. Either that or secretly settle for a lesser cash premium since it has convinced enough people that there isnt a delivery problem.

What is the remedy to this problem? Our group is thinking of taking delivery if the price of silver is not above $37 in March. This is the exact scenario that Comex wants to have. A game theory problem among multiple participant with imperfect information. Even if there are many hedge funds like us, if Comex can pretend that it doesnt have a problem, then it cant be blackmailed into settling for a hefty premium even though it is still in dire straits. The only remedy is for everyone to stand for delivery no matter what, either that or gain 20 plus percent on the value of the contracts in which case silver must be above $37 in March.

I'll have more to say later but for now this is what we are thinking.

Our group is seriously thinking of standing for delivery if the price of silver is not over $37.